Compulsory Local Marine Cargo & Goods in Transit Insurance to Boost Economic Growth

18th, Dec 2024 Share This

The Uganda Insurers Association (UIA) has said adoption of compulsory local marine insurance starting next year will help drive the growth of Uganda’s economy. Effective February, 1, 2025, all importers will be required to ensure their cargo using local companies.

John Bukenya, a member of the Non-Life Technical Committee at UIA said compulsory local marine insurance presents immense benefits not only for importers but the country at large.

“As insurers, we know this will help protect and grow Uganda’s economy. Economy can’t grow without insurance. Any goods that are damaged or lost are a leakage from the economy.

If for example we say, a year, shs100 billion worth of goods is lost in imports, either stolen, or damaged, that is a big loss from the economy. If these goods were insured, it means there is no loss as insurers will pay back these people,” Bukenya said.

Uganda recently launched its Local Marine Insurance platform aimed at easing the experience by importers while securing marine insurance from licensed local companies.

The platform is a joint effort by the Insurance Regulatory Authority of Uganda (IRA), Uganda Revenue Authority (URA) and the Uganda Insurers Association (UIA).

The launch follows a Ministry of Finance ’s directive requiring importers to only use local insurance companies to provide cover before clearing goods.

So, why has the implementation of compulsory local marine insurance dragged?

People needed to be sensitized about local marine insurance and its benefits. Some stakeholders were saying, we have our marine insurance which we are getting outside and so we don’t need local insurance. 

Others were not sure about marine insurance and how they are to pay. We decided there was a need to engage traders, associations, KACITA, importers, shippers and all stakeholders.

Which gap does local marine insurance seek to close?

We have mandatory insurances like motor third party and workmen's compensation but many people say it is a big cost to them but it is there to protect them from liabilities if they were taken to court.

Insurance comes in and pays. For example, if an employee gets injured at your place of work, as an employer, if you are taken to court, you will have to pay.  Probably you would have paid a premium of shs10 million but that liability might even cost you shs100 million. 

Sometimes if you don't do things compulsory, people might not know the advantage that accrues from them.

The thing about marine insurance being compulsory in the country is that insurers are here in Uganda, we have the regulator in Uganda and as long as that claim is payable, there is no way you won’t get paid.

In its 2015 report, the Inter-Government Standing Committee on Shipping (ISCOS), reported that the Ugandan Government lost revenue worth sh60.3 bn as Value Added Tax and sh35 bn as stamp duty through insurance of imports by foreign insurers, that between 2009 and 2013.

Source: The New Vision (click here to view)